Employees in the financial world are often less trustworthy and less socially aware than the average.
Whether Cum-Ex businesses or Wirecard - at regular intervals a scandal shakes the financial industry. The already shaken image sinks after each new revelation and customers, politics and society increasingly lose confidence. WiSo-Professors Matthias Heinz and Matthias Sutter, both economists of the Cluster of Excellence ECONtribute: Markets & Public Policy, together with Heiner Schumacher (KU Leuven) and Andrej Gill (University of Mainz) have found a possible reason for the scandals in the financial sector: In an experimental study, they measured the trustworthiness of students and found that the least trustworthy ones work to an above-average proportion in the financial industry later on.
To this end, the researchers conducted a long-term study with students of economics at the Goethe University Frankfurt. In the first wave in 2013, they asked 265 students about their career aspirations, social preferences and personality traits.
Furthermore, they tested how trustworthy the students are in a computer-supported laboratory experiment, a so-called trust game. The students received eight euros and were able to give a second person an amount between 0 and 8 euros. The amount was then tripled by the researchers and the second person could then decide how much to give back to the first person. People who returned a higher amount were considered more trustworthy than others.
The result: Students who planned their career in the world of finance were 30 percent less trustworthy than those who saw their career start in a different industry after their studies. In 2019 and 2020, the team repeated the survey and found that the less trustworthy people had actually taken a job in the financial world.
Trust is particularly important in the financial world - and is the basis for a business relationship between clients and consultants. If consultants take advantage of the trust placed in them, since they are usually better able to assess the complex information available to them in the financial world than their customers, this can lead to misconduct on the part of financial employees. This in turn can become a source of scandals and fraud. The financial world could counteract this by sorting out the less trustworthy employees when they are hired.
Matthias Heinz outlines another possible perspective: "Students who want to work in the highly competitive financial world are less trustworthy than those who want to work in other industries. However, the financial world does not seem to sort out less trustworthy people during a hiring process but actually hires them. In addition, only four percent of employees move from finance to another industry, which makes the selection of employees particularly important," says the Professor for Strategy at the WiSo Faculty, explaining the results. Further research is therefore necessary to understand recruitment processes in the financial world and to derive policy implications.
The study is part of the Cluster of Excellence ECONtribute: Markets & Public Policy. The only cluster of excellence in economics funded by the German Research Foundation (DFG) is located at the universities of Bonn and Cologne, the Max Planck Institute for the Study of Public Goods and the Institute on Behavior & Inequality (briq). The cluster conducts research on markets at the interface between business, politics and society.